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Thursday, April 4, 2013

A Final Plea for Federal Labor and the May Budget: Progressively Fund Gonski and NDIS – and No More Austerity!

Above: A message for Bill Shorten - Please do whatever you can to lock in funding for Gonski, and for the NDIS which you were instrumental in championing; And Please do not do so at the cost of further callous austerity as in the case of Sole Parents!

In the following article Tristan Ewins argues that Labor needs a credible narrative on NDIS and Gonski - with progressive funding mechanisms 'locked in'. He argues that it is an Abbott government which would really 'divide Australia'; and again that reform of Superannuation Concessions for the top 5% or 10% income demographic are key to delivering on Labor's Social Insurance, and educational 'equal opportunity' agenda.

(nb: Just in April 5th: Bill Shorten confirms that about 16,000 wealthy Australians will be targeted - those with superannuation incomes over $100,000 a year (ie: superannuation savings of about $2 million or more) - bringing in about "$350 million over the forward estimates period." (now the ABC is reporting a higher figure of $900 million; but SBS says that's 'over four years') The question is STILL - where is the rest of the money ($20 billion or more) coming from for NDIS and Gonski? At Facebook Richard Denniss is calling the decision 'pathetic'. PLS read on - and your comments and ideas are welcome here!)by Tristan Ewins

Increasingly Coalition rhetoric in
Australia emphasises what it labels the ‘divisive’ nature of Labor policies. Abbott poses as the bearer of conciliation; of ‘good government’; of a
‘traditionally classless’ Australia where issues of distributive justice never
even come in to the ‘national conversation’.Of course the old egalitarian Australian ethos rested on labour movement
traditions: on a strong labour movement, and far-reaching industrial relations
regulation. But as far as Abbott is concerned ‘why let the truth get in the way
of a good story’?

In fact, the person with a ‘plan’ to
divide Australia is Tony Abbott.The
Abbott ‘plan’ is to create ‘two Australias’: divided on the basis of the
quality of health care, education, aged care, child care, parental leave and
transport infrastructure that citizens can afford or otherwise enjoy.Quite likely, the Abbott ‘plan’ is to
entrench these divisions to the point where they become permanent. That is - to
the point where the Conservatives ‘capture’ a vital ‘middle demographic’ which
develops an economic self-interest in the withdrawal of welfare and social wage
mechanisms for the less-well-off, and including the end to all pretence of
‘educational equal opportunity’.Further
down the track there is the potential prospect of that ‘classic Thatcherite mixture’
of labour market deregulation and ‘trickle-down’ economics; resting upon the
development of a permanent layer of exploited and politically disengaged
working poor. The ‘Abbott plan’ would also almost certainly mean that user pays
mechanisms – and potentially privatisation - are applied to make up again for
budget shortfalls. Ordinary workers would also suffer the brunt of such
attacks.

Labor needs to differentiate itself
from Abbott at a fundamental level.Labor’s commitment to Social Insurance must mean socialisation of risk
regarding health care, aged care and disability care – providing real social
security for all Australians and their families. It must mean collective social
consumption in these areas to provide the best value for all.And socially-financed infrastructure needs to
avoid the drawbacks of privatisation and regressive user pays mechanisms.Labor needs to generate a winning narrative
along these themes.

But while quality public education, as
well as collective consumption and social insurance are in most peoples’
interests, such policies come with a price.With that in mind I return again to the question of superannuation and
tax reform –concerned that in the face
of another ‘fear campaign’ Labor may be on the verge of ‘losing its nerve’
before the May Federal Budget.

In ‘The Age’ today - April 4th 2013 - this
writer was concerned to hear that Labor Minister for Superannuation, Bill
Shorten claimed that changes to superannuation concessions would not be adverse
to people earning “up to four times the average weekly wage”. That is in the vicinity of or over
$250,000/year if applying to full-time work; or according to the Herald-Sun on
April 2 – around ‘the top 1 per cent’.Though if including part-time work as well the
figure would be much lower – ie: closer to $200,000/year.

Referring to a paper written by Labor MP Andrew Leigh from 2006, Matt
Cowgill pointed out in ‘The Drum’ in 2011

Those figures are now out of date, but they would
remain close enough to the current reality to impart some idea of who are the
real ‘battlers’ – as well as who are doing very-well. (and how many of these
there really are)

Further: despite claims that millionaire status
‘does not mean what it used to mean these days’, studies by the Australian
Bureau of Statistics from 2011 showed barely
10% of Australians enjoyed a “net worth” of over $1
million.

So do the millionaires really need further tax
breaks?Even when some individuals may
face retirement on ‘a mere $50,000/year’, what do we have to say for Aged
Pensioners – who have worked their whole lives – now trying to survive on
about $20,000/year – and less if treated as a couple?

By contrast, this author has long argued for
superannuation concessions to be removed from at least the top 5% income
demographic – which would bring in around $10 billion according to Richard
Denniss of the Australian Institute.

Bill Shorten had been instrumental in backing the
National Disability Insurance Scheme, and had made no secret of his discomfort
regarding austerity against Sole Parents.Yet Shorten now appears to be
going significantly further than Labor MP Joel Fitzgibbon’s concern for his
constituents in the mining industry earning a ‘meagre’ $140,000/year.And let’s be clear: Even in the ‘Herald-Sun’
on February 9th 2013, Karina Barrymore observed that the average
final superannuation savings for womenwas only $112,000 – and
$192,000 for men.

Genuine ‘battlers’ cannot afford ‘welfare for the
rich’ in the form of massive tax breaks for people who can save more money in a
year than others can aspire to save in a lifetime.And these are tax breaks which discriminate against average working
Australians – who simply don’t have the spare income to divert in to
superannuation tax shelters.Such tax
breaks come at the cost of the infrastructure, services and welfare upon which
the vast majority of Australians depend. In a sense it is ‘class warfare’, yes.But it has been a ‘war of aggression’
against poor and working class Australians: waged in the interests of the
wealthy, and in the interests of the ‘upper middle class’ – who find themselves
in the ‘ideological and economic orbit’
of those most wealthy. (Importantly while the upper middle class may not be 'fabulously wealthy' - a term deployed by Craig Emerson - they are certainly very comfortable compared with the vast majority of workers - and quite capable of paying their fair share towards the social good)

Admittedly, though, the position of some mining
workers can be ambiguous – as they enjoy high wages – but many depend on their
industrial organisation to get a fairer deal from the mining bosses.Their living expenses can also be higher than
average Australians. Many are torn between solidarity with fellow unionists,
and a sense of their economic interests as part of a relative ‘labour
aristocracy’.

And yes, the chorus of claims of ‘class warfare’ are
hurting Labor. There remains an idea of an ‘idyllic’ and ‘classless’ past; and
old Labor stalwarts such a Bill Kelty are harking back to the Hawke years of consensus
and ‘national reconciliation’. But
comprehensive ‘class peace’ was always chimerical.Attacks on the wage share of the economy, as
well as the social wage and welfare state, and industrial rights – never
ended.Though even former Conservative
Prime Minister John Howard himself stated at one point (while still in
government) that he favoured the principle
of progressive taxation!And during the
early period of the Accord, on the Left there was not an abandonment of social
and distributive justice – but an aspiration to expand social wages as occurred
in Sweden.Yet today distributive
justice and a compassionate welfare state are considered ‘unspeakable’: branded
as “divisive” and of representing “class war”.

But this is ‘the crunch’. When considered together the
NDIS and Gonskiwill cost the Budget
bottom line in the vicinity of $20 billion. And that is without even
considering the hugeinfrastructure backlog affecting the
states, with the prospect of regressive tollsfor new and maybe even existing roads, and
insufficient public transport options for many workers to even have a viable
choice how they commute to work.

It is
also without considering the plight of
our most vulnerable aged citizens: their unnecessarily pronounced suffering
as a consequence of insufficient funding for Aged Care; and the highly
regressive ‘user pays’ mechanisms that increasingly apply.

NDIS and Gonski in particular have become
‘signature’ Labor policies. So where is the money coming from?

And let’s keep in mind: Come September people will be asking the same question of Abbott.

Labor needs to ensure its ‘signature’ policies are
fully costed without further regressive
austerity!This is the precondition
for making the most of exposing the radical austerity that will underscore
Abbott’s ‘plan’ for Australia.

On March 21st Jessica Irvine – also from
the ‘Herald-Sun’ - suggested a whole suite of potential policies, including an
increase to 30% of taxation rates on those on incomes of $300,000 and
above.That apparently would bring in
$500 million a year.(about 2.5%
of what is necessary to pay for Gonski and NDIS!)Perhaps Irvine’s intention was to foster less
significant expectations – in order to make ‘root and branch’ reform of
superannuation concessions politically awkward and damaging for Labor.

The monopoly media is also attempting to rush Labor
into a commitment – perhaps to protect the interests of the wealthy, and to
render NDIS and Gonski ‘unfundable’.Allowing time for further speculation could also be damaging – as it was
with the Carbon Tax.But not nearly as
damaging as getting it wrong: dropping ‘signature’ policies, or turning again
to callous austerity (eg: Labor policy on Sole Parents) in a ‘Zero Sum’ outcome for Labor’s
constituencies.

While ‘The Age’ has generally been giving Labor a
much harder time since Gina Rinehart became the most significant individual
shareholder in Fairfax, it pretty much ‘got it right’ on the super concessions
debate in a recent editorial. Hence
the following:

“The rich can avoid the 45 per cent tax
rate on earnings above $180,000 by diverting large sums into super at the same
concessional rate of 15 per cent that applies to everyone else. Treasury
figures show 37 per cent of the value of concessions flows to the top 5 per
cent of earners…”

Super is being exploited to subvert a
long-accepted, progressive policy of taxing higher earnings at a higher rate.
Super concessions become more generous for higher earnings. The average male
retiree, Treasury figures show, gets about $270,000 in age pension payments and
tax concessions. The concession alone
is worth $520,000 on average for the top earners - well over twice the total
average ''nest egg'' of male workers nearing retirement and more than four
times their female peers' balance. The top 20 per cent of earners get half the
value of all concessions.

Taken proportionately, that would also
mean $15 billion in concessions for the top 5 per cent alone by 2015.

Drawing additional revenue from ‘the
top one per cent’ quite simply does not target a broad enough base to bring in
sufficient funds. If Bill Shorten and
others want to ‘back down’ on superannuation concessions, and other very significant
progressive options for tax reform, then Labor’s signature policies are either
finished – or they will come at the cost of deep austerity elsewhere.
Even further means testing of benefits such as the Private Health Insurance
Rebate cannot bring in anywhere near the kind of money that is required on
their own. The only other possibility is a series of budget deficits: and that cannot be sustained over the course of the whole business cycle either.

While the ACTU at one point was
arguing for action to remove superannuation concessions for the top 10% income
demographic, this author is again arguing for an absolute minimum policy
of removing concessions from the top 5 per cent income
demographic. This would bring in about half the money necessary for Gonski and
NDIS.Further tax reform would also be
necessary – perhaps of the Minerals Resource Rent Tax – and of Dividend
Imputation.At ‘Crikey’ John Quiggin was
on record as supporting an
increase in the Medicare Levy to pay for NDIS specifically.

There is no need to make policy on
superannuation concessions retrospective – as Simon Crean says concerns him.But there is the need to make the system
sustainable – as Swan, Shorten, Wong and others have readily admitted.But if Labor will not at the very least
remove or very significantly wind back concessions from the top 5 per cent (or
more preferably the top 10 per cent)then
the sustainability of superannuation concessions is ‘out the window’. As quite possibly are Gonski and NDIS.One way or another Labor needs to exact at
least $10 billion for this year – and more in future years - by removing
overly-generous superannuation concessions.

Most importantly: Labor needs those
improvements provided through such reform - in social services, welfare and
infrastructure - ‘on the record’ and cemented in the public consciousness well
before the September Federal election.

Australia is a growing nation which
demands investment in transport, communications and education infrastructure.And Australia is an ageing nation – with
health and aged care costs set to rise. (with aged care services already
grossly inadequate for many – involving untold human suffering)

NDIS and Gonski demand about $20
billion in new annual funding.Aged Care
requires an injection in the vicinity of $5 billion annually if the government
is serious about providing quality of life, supporting Carers and removing
regressive user pays mechanisms. Then there is the need for reform of Newstart;
and for strong investment in transport infrastructure and health services. And simply increasing the retirement age
shouldn’t be seen as an option for a Labor Party concerned with ‘work/life
balance’.

For a long time Labor has proudly
claimed the mantle of “small government” – arguing it has held the size of
government down proportionately compared even with the governments of John
Howard.This quite simply is no longer
sustainable.If Labor does not expand taxation progressively and very significantly we will see further user
pays mechanisms for education,for
health and aged care, and for transport including roads.Privatisation simply makes matters worse –
saving the government’s budget bottom line – but passing increased costs (of
administration, profit margins, and finance) on to consumers.

This author would warn Shorten, Wong,
Swan and others: There are pervasive elements of the media that will spin
everything and anything Labor says and does against it.But austerity against Sole Parents hurt Labor’s
credibility severely. And failure to provide for NDIS and Gonski sustainably
would leave the government without a compelling and credible narrative.

We need far-reaching reform of tax and
superannuation concessions in the May Budget.Without credibility on funding our ‘signature’ policies, and a record of
delivering on such commitments, Labor will not be in a strong position to
capitalise on the sweeping austerity, human suffering and social injustice
which would follow an Abbott government.

Labor
must not lose its nerve.nb: I sincerely hope I am wrong in this article and that Labor does find a way of funding Gonski and NDIS come the May Budget. I'd be glad to be able to admit I was wrong!

11 comments:

nb: A message for Mike Fisher if he's reading this; I realise I didn't recognise you at the SEARCH meeting some months back and I'm sorry! I hope you're still reading this blog; and might maybe want to contribute something one day? best, Tristan.

"Not only have they confirmed their desire to continue giving billions of taxpayers dollars to the to 1 per cent but their 'reforms' don't even reduce the $32 billion per year cost of tax concessions by 1 per cent! they will save around $250 million per year! What were they thinking? Did they originally plan to do something useful and lose their nerve or if they were planning to do so little why did they take a weeks worth of pain. Sad really."

nb: the figure of money saved seems to be changing all the time; This morning ABC reported "$350 million over the forward estimates"; and just recently it was reported as "$900 million over the forward estimates"... Regardless - $20 billion is needed for Gonski and NDIS. If we don't show where the money is coming from Abbott and co will tear us apart!

I could list others. Landlord investors in the real estate speculation industry are making a killing in their market as the immigrants keep moving in while the supply of housing is kept low by their pals in government. Demand exceeding supply always blows such nice real estate bubbles. NEARLY half the people in Australia who sold properties at the end of last year made at least 50 per cent profit on their initial purchase price.

Agreed it's disgusting, Mike - But what can we do about it? Maybe revisit the MRRT and look at a banking super profits tax? But if the government got spooked by the top 5% whipping up panic over concessions - what's the chance of anything more substantial? I stand by what I've said elsewhere - I don't know where the money is coming from now. Wong, Swan, Gillard, Shorten - please prove me wrong! And please wind back that dreadful sole parents decision come May.

READ THIS! If only Bill, Penny, Wayne and Julia had listened to this man. George Jericho at 'The Drum' on the privileged and so-called 'struggle street'. See: http://www.abc.net.au/unleashed/4605414.html

A message for Mike Fisher in the event that he's perusing this; I understand I didn't recognise you at the Search gathering a few months back and I'm too bad! I trust you're even now perusing this website; and may perhaps need to donate something one day?

I could record others. Landowner gurus in the land hypothesis industry are raking in huge profits in their business as the workers continue moving in while the supply of lodging is kept flat by their buddies in government.

Thanks all over again intended for another” sense good, exceptional, that you have good individuals these days story”. Most of us study a great number of experiences that are bad in relation to individuals in addition to precisely what many people accomplish to people. A haphazard behave involving kindness is usually this kind of thing to know in relation to. Tranquility in addition to benefits.Business consultancy dorset

THE RED FLAG IS STILL FLYING HERE

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Tristan's areas of expertise include Australian and world politics, social theory, education, history, and computer gaming for PC. He considers himself a liberal, and also a socialist, but has also referred to himself as a left social democrat. He says such - conscious that there was once a time when 'social democracy' and 'socialism' were synonymous. Furthermore, Tristan is a long-time member of the Australian Labor Party - specifically its Socialist Left wing. He is also involved in the Australian Fabian Society. Tristan has written for many publications - including a stint freelancing for 'The Canberra Times': the daily broadsheet of the Australian Capital. Tristan's Personal Homepage is here: http://sites.google.com/site/tristanewinsfreelancewriter